The Currency Exchange Rate Oversight Reform Act was approved in the U.S. Senate on October 11 by a majority of 63 to 35. The bill calls for retaliatory trade measures against countries that maintain an undervalued currency, and while it does not mention China by name, China is clearly its main target. As such, the bill was also nicknamed China currency bill.
On October 3, when the China currency bill passed US Senate procedural vote, MOFCOM Spokesperson Shen Danyang commented on the issue. Mr. Shen pointed out that, some US senators intend to use RMB exchange rate bill to shift US domestic difficulties on other countries. That is unfair, and runs counter to international norms. China is deeply concerned about it.
Mr. Shen pointed out that balance of international trade should be taken into consideration when talking about exchange rate in any country. In recent years, China has been paying great efforts to promoting trade balance. In the first half of 2011, surplus in current account of China accounted for 2.8% of total GDP, and the proportion of trade surplus in GDP dropped to 1.4%, which is among the reasonable range according to international recognition. China’s international trade is more balanced, and conforms to China’s exchange rate.
Mr. Shen said that, the basis of China-US trade and economic cooperation is mutual beneficial and win-win. The current situation of China-US trade is the result of global industrial specialization and structure adjustment, a substantial part of US trade deficit with Chinais because of the trade diversion from other countries and regions in East Asia, as well as US restriction of hi-tech products export to China. Trade surplus exists in China’s goods trade with US, but its trade in services with US has remained in deficit for a long time.
Mr. Shen pointed out that to promote the balanced development of bilateral trade needs the joint efforts of both China and US. China has taken proactive measures to expand import from the US. Over the past decade, China has been the fast-growing major export market of the US. According to US statistics, US goods export to China has reached US$91.9 billion in 2010 from US$19.2 billion in 2001, an increase of 379%, while US goods export to other countries in the same period only grew by 67%. In recent years, the growth of US export to China is significantly higher than its import from China. We hope the US will make efforts on practically relaxing export control to China and other related issues.
Mr. Shen stressed that pressing RMB to appreciate cannot resolve China-US trade imbalance or US unemployment, but will impair the joint efforts of China and US to promote world economic recovery. In this complicated, sensitive and changeable period of world economy, we need a stable international currency environment. All nations have the responsibility to deal well with their own affairs, strengthen cooperation, oppose trade and investment protectionism in all forms, and advance the robust, sustainable and balanced growth of world economy. China and the US should abide by WTO rules, prevent the politicizing of economic issues, and create a sound environment for the steady development of world trade.
Source: Ministry of Commerce Website; http://english.mofcom.gov.cn/aarticle/newsrelease/policyreleasing/201110/20111007775492.html